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ILO’s Zampini: North Macedonia to take measures to prepare job sites for possible COVID-19 resurgence

Daniela Zampini, Senior Employment Specialist at the International Labor Organization, says in an interview with MIA that the accent during the lockdown and isolation measures period was on maintaining jobs and income, but now new measures must be implemented in the reopening stage.

Skopje, 4 July 2020 (MIA) – Daniela Zampini, Senior Employment Specialist at the International Labor Organization (ILO), says in an interview with MIA that the accent during the lockdown and isolation measures period was on maintaining jobs and income, but now new measures must be implemented in the reopening stage, including preparing job sites for a possible virus resurgence.

It’s necessary for the state to keep taking measures that will keep businesses and jobs alive, especially for young people. This isn’t just the right thing that would prevent the creation of a “closed” generation, she says. These efforts could have a positive effect on maintaining the overall demand in the near future.

Zampini adds that it’s important to have an overview of the available fiscal space before implementing complex measures and ambitious goals in regards to this scope. Nonetheless, the macro-economic aspects should be considered before investing in employment support programs.

Following a request made by the Economic and Social Council, you recently came out with recommendations for maintaining jobs and protecting businesses in North Macedonia. How many of them are implemented in the measures already taken by the authorities? What else can be done in order to keep as many jobs and save as many businesses as possible?

The government enacted a decree that broadened the range of the compensation scheme in case of unemployment, for all people who were unemployed between March 11 and April 30 2020, as a direct result of the recommendations suggested by an analysis conducted by the ILO. This measure encompassed all employees in the duration of 2 months since their employment contract ended, no matter how long the contract lasted, and it refers to all ways the contract was terminated – whether it was by the employer, or with a deal. Even though the scope’s duration is shorter than the recommendation given in the Analysis, it’s a step in the right direction as a response to the negative consequences caused by the COVID-19 crisis.

We expect that the other recommendations in the analysis will be given special attention, given that the Economic and Social Council adopted it at its 59th session, held on June 2. Multiple employee and company protection activities should be conducted, and one of the important things the analysis highlights is taking the measures at the right time. The correct policies should be implemented at the right time in order to maximize their effect.

Is this country capable of taking all the necessary measurements, given its limited revenue?

The available fiscal space should be considered before applying complex measures, as well as the macro-economic aspects. For instance, the analysis highlights the importance of continued support, and even expansion of the youth employment measures. Investing in jobs for young people is more than just the right thing that would prevent the creation of a closed generation, it could affect the overall demand positively.

In COVID-19 conditions, young people, as spenders, are less limited by health problems than older employees who will abstain from high-contact expenditures such as traveling or going out to restaurants, as well as investing in real estate and permanent products. Investing in maintaining the young people’s jobs and incomes would boost companies’ attempts to heal in times when the demand of goods and services of older employees is insufficient to maintain the overall demand.

Investing in jobs for young people is a stimulus package. The analysis highlights that the government was a bit stingy in the initial phase of the crisis. There’s probably space to increase investments, especially in regards to the measures for which there is a tri-partition consensus between the government and social partners.

What do you think about the state of the economy in this country?

As the study points out, the crisis hit North Macedonia during an economic growth, with a constant, although moderate GDP growth since 2013. 40,000 jobs were added to the country’s economy in 2019, which is a massive growth in comparison to the previous years’ average. Nonetheless, structural bottlenecks and political instability set back productivity and competitiveness. Service sectors with bigger added value, such as the IT sector, finance and insurance have become more significant in terms of their added value, but their creation of new jobs is limited.

A big portion of the work force stays trapped in jobs with low productivity, such as agriculture and the textile industry. As a result, the overall labor productivity hasn’t increased quick enough to secure salary increases and an improvement of the living standard. That’s the point: the citizens’ legitimate expectation that work, no matter if it’s manual or an office job, should lead to a good living standard for all, and protect those who can’t work.

The economy is expected to drop by 3.5% this year. What would that mean for the labor market in North Macedonia?

There are more ways to look at this scenario. Economists believe that labor demand depends on the demand for goods and services. The fall of the overall production would cause a reduction in the number of jobs, and this fall depends on the varying flexibility of each sector.

We can look at this issue in another way as well, and imagine a situation in which the jobs stimulate the economic growth, and transmission mechanisms are in reverse. Such a thing can happen at lower, local levels. The ILO has been promoting the Local Employment Partnerships concept for years now.

This approach is borrowed from the territorial employment partnerships used by the member states of the EU for boosting the economically vulnerable communities in the late ‘90s. It’s based on cooperation and local planning in order to achieve mutual employment goals defined by the local interested parties.

The community has identified its employment challenges and has received the support of technical experts, generally from the ILO, upon determining appropriate locally-ready solutions. Over the past years, several LEPs have been in function in the countries of Eastern Europe and Western Balkans, which has led to positive results in small communities in the region regarding the creation of jobs and the transition towards formality. The first LEP was recently signed in Bitola.

Unemployment in this country hasn’t risen drastically, according to the Employment Agency data. Is this due to well-designed measures? Can a larger wave of lay-offs and unemployment be expected in the latter half of the year?

There are multiple reasons for this marginal growth. That’s why it’s important to understand what’s behind the labor market indicators, and exactly what it is that we’re measuring here. The report states that, since the crisis started, governments and social partners in countries with strong institutions on the labor market have three cardinal ways to protect jobs and employee incomes.

The first step are job-keeping schemes which aim to maintain employment status while companies get over the crisis. Aside from this, temporary income support schemes are used for employees who don’t qualify for job keeping measures, such as self-employed and seasonal workers, workers with an atypical form of work.

Step two is expanding employee support for those who lose their jobs due to the economy slowing down, by temporarily relaxing the criteria for qualification for compensation in case of unemployment and compensation for job-seekers.

Step three is expanding social protection tools, such as social aid and minimal guaranteed income for persons and households that do not qualify for the job-keeping measures and unemployment protection.

In accordance with some of the aforementioned guidelines, North Macedonia has brought a series of temporary measures for preventing and mitigating the negative economic and social consequences caused by the crisis.

The focus is on maintaining employment which maintains a steady work relationship, supporting companies in their endeavors to keep their work force instead of letting people go. The results from the survey for companies conducted by employment organizations in North Macedonia have confirmed this trend: less than 10% of employees have been laid off during the lockdown and isolation period.

This factor, combined with the limited scope of compensation in case of unemployment, and the initial inaction of households during the first weeks of the crisis, has affected the flow in the Employment Agency registry and the number of compensation requests.

In the next phases of the crisis – reactivation and recovery, there could be a growth in unemployment in North Macedonia, especially registered unemployment, as well as growth in insufficient work engagement and discouragement. These indicators will have a significant role in directing policies for the latter half of this year, as well as in 2021.

Slavica Stefanovska

Translator: Dragana Knežević

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